On the non discrimination principle (…and its limits?)

Last week, at Global HigherEd, Peter Jones reported on a forthcoming European Court of Justice (ECJ) ruling in the case of Jacqueline Förster v IB-Groep. This is one of a range of recent cases handled by the ECJ that might have substantial effects for higher education policies throughout Europe.

The Grzelczyk judgment suggests that EU students are entitled to claim maintenance grants when they find themselves in the same situation as nationals of the host Member State. Before the Maastricht Treaty, the Court refused the right to obtain loans and grants while studying in another member state. The Bidar Case changed this. Here, the Court argues that it is legitimate for a host Member State to grant such assistance to students who have demonstrated a certain degree of integration into the society of that State (although the Court made clear that Member States have a right to protect themselves against ‘grant-tourism’).

This ‘certain degree of integration’ is now being tested in the Förster Case. German student Jaqueline Förster went to the Netherlands to study in 2000. She did the minimum number of hours of work in order to be eligible for the Dutch student support. This amount of work apparently provided a substantial enough degree of integration. The Dutch scholarship board initially granted the student aid to her but asked for a partial refund in 2005 because Förster had not worked in the second half of 2003. She took the case to court saying the move was discriminatory as Dutch students do not have to work (see also this article in EU Observer).

An additional issue came up in the Netherlands after Nuffic presented its annual mobility monitor. This showed that the outgoing number of students was lower for the Netherlands than the incoming students and that the largest source of incoming students was Germany. While at least 16,750 German students were enrolled in the Netherlands, only 2,100 Dutch students were enrolled in Germany. A few days later, the ‘Dutch equivalent of the Financial Times’ carried a headline saying that German students cost the Dutch government at least one hundred million Euros. Reason for this is of course the fact that – because of the non-discrimination principle – EU universities can not charge higher tuition fees for foreign EU students than they charge for their own students. Considering Dutch higher education is still heavily subsidised by the government, German students are indeed partially funded by Dutch tax payers money.

Let’s first say that this claim is too one-sided and oversimplified. Obviously, while the balance is negative with Germany, the balance with other countries might be positive for the Netherlands. But most of all, the (future) benefits of these German students for Dutch higher education and for the Dutch economy are neglected in their calculations, partly of course because these indirect effects are more difficult to measure. Nevertheless, this issue again shows the problem of the non-discrimination principle. In a region of nation states – which the EU still is – the prohibition of discrimination on the basis of nationality is simply hard to sustain.

Earlier I already made a comparison with the United States, where discrimination on the basis of state is apparently allowed. Tuition fees for inner-state students are lower than those for outer-state students. So in this respect, the European Union is even ‘flatter’ than the United States. In the way the different countries fund their higher education systems however, the European Union is not flat at all. While some countries do still not charge any tuition fees, in other countries, universities gain more and more freedom in setting these fees. As long as these funding patterns are spiky instead of flat, the non-discrimination principle will present problems. As long as mobility patterns in Europe are fairly symmetrical, these problems can be overcome. But if they are not, the European countries might have to search for other solutions. There are basically three directions in which these solutions can be sought.

The first one is of course a further harmonisation of funding systems in European higher education in order to flatten the field. This then should go into the direction of student based funding instead of institution based funding, accompanied by higher tuition fees. This option will be very unlikely, to say the least.

A second option is to neglect or abolish the non-discrimination principle and make it possible to charge higher fees for foreign EU students. This would basically mean a 180 degrees reversal of decades of European policies in higher education and would seriously risk the willingness of students to be internationally mobile.

A third option is to compensate for the a-symmetry. In principle this would again mean that government funding would follow students, not institutions. This would actually create a system of portable higher education funding. In this case, the Dutch government would for instance pay the German government for the Dutch students enrolled in German institutions and vice versa. The main dangers of this model are twofold. First of all, it is likely to create a lot of new European bureaucracy. And of course we are not waiting for a higher education version of the Common Agricultural Policy. Another – and maybe more severe – risk is that institutions and countries will no longer stimulate international mobility within Europe or maybe even discourage it.

But not doing anything or ignoring it is not an option either. If nothing is done and both the mobility and the a-symmetry keep increasing, there will be a strong tendency for further privatisation of the sector. Only by privatising the sector, governments can avoid spending tax payers money on foreign students. I’m pretty sure that this scenario is not preferable for most governments either, let alone for the students.

It is thus time to seek a European solution. It would not be wise to let the ECJ determine this solution step by step, case by case, through its individual judgements. It’s better to bring it back into the political arena and decide on the direction democratically.

UPDATE: On July 10th, the Advocate General Jan Mazák presented his opinion on the Case Jacqueline Förster v IB-Groep. The IB-Group (the organisation that administers the student financial support system in the Netherlands) uses as a criterion that students should have been working for five years or more in the Netherlands in order to be eligible for Dutch student support. This interpretation of ‘a certain degree of integration’ is now being contested by Mazák. He argues that:

Thus, whereas rights to social benefits were originally linked to the pursuit of economic activities (in particular in the form of paid employment, which underpins the concept of a worker), they may now also be available to economically inactive citizens on the basis of the principle of non-discrimination. Whereas a Member State was previously required to assume full social responsibility and provide welfare for those who had already entered its employment market and who thus made some contribution to its economy, such financial solidarity is now in principle to be extended to all Union citizens lawfully resident on its territory.[55]

In he relation to the five year requirement he states:

Member States are obviously allowed to some extent to apply general conditions which require no further individual assessment, such as the three years’ residence requirement at issue in Bidar. However, the case-law of the Court also suggests that the condition imposed may not be so general in scope that it systematically excludes students, regardless of their actual degree of integration into society, from being able to pursue their studies under the same conditions as nationals of the host Member State. In other words, the criterion used must still be indicative of the degree of integration into society.[129]

In my view, that is not the case with a five-year residence requirement, since it can reasonably be assumed that a number of students may have established a substantial degree of integration into society well before the expiry of that period. That is especially the case with students who, like Ms Förster, have also pursued occupational activities in the host Member State in addition to their studies. In fact, as has been submitted by Ms Förster, a residence requirement of five years may prevent students who make use of their right to move to another Member State and study there from benefiting from their right to equal treatment as citizens of the Union in respect of study allowances, regardless of the actual link they may have established with the society of the host Member State. That cannot in my view be considered proportionate.[130]

Concluding that:

When a student has already been resident in the host Member State for three years, as in the present case, it would seem disproportionate, even though five years may not have yet elapsed, to refuse study finance if the student can adduce reasonable evidence that he or she is already substantially integrated into the society of the host Member State.

If the ECJ will follow the Advocate General’s advice (as it usually does) this again might have serious implications. Not just for Dutch higher education and its funding, but also for other countries in Europe.

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